Creative Writings

From early history to the introduction of long range cannons, missiles and air attacks, fortresses and moats have been the prime mode of defense. The great wall of China was built to withstand attacks from so called barbarian hordes. Hadrian's wall in Britain was meant to keep the attacking Scots at bay. A moat surrounding a castle was an added deterrent from attackers being able to scale the walls easily. The ability of a company to deter competitors from entering its field because of technological, financial or logistics barriers is characterized as the original company having a wide moat of safety.

In the present era, it would be almost impossible for a new car company to succeed unless it had a tremendously better or cost effective technology. Similarly, a new company would find it very difficult if not impossible to compete with UPS or FedEx because of expensive logistics and fixed investment. This is why technology companies despite having high profit margins, have to spend much of their profits on R&D. See how leaders of yesterday like Yahoo, Ebay and even Microsoft have been overtaken by Google, Amazon, because entry barriers are low and paradigm changing technologies lurking round the corner in a new inventor's mind. It is much more difficult for new drug companies to emerge because of high costs and time delay for becoming profitable. Successful new ones like Genentech, Gilead and Amgen have to tie up with majors like Roche, Glaxo or Pfizer for distribution and marketing.

A country without revisionist, expansive or neo-imperial ambitions has to erect a wide and difficult to penetrate moat. It has to brazenly advertise that the cost of attacking it would be ruinous just as some butterflies and frogs have bright iridescent colors warning predators that they are poisonous and harmful. This is why Israel, India, Pakistan, North Korea opted for nuclear weapons and Iran wants them. Even the US and Russia opted for MAD ( Mutually Assured Destruction) strategy.

The nuclear bombing of Hiroshima and Nagasaki was not to defeat Japan or reduce US casualties. It was a veiled threat to the USSR which had no nuclear weapons at that time, to desist from any further annexation of territory to shroud in its iron curtain. Contrary to the hoopla and false propaganda, it was the army of the Soviet Union that dealt Nazi Germany a deadly defeat at the cost of 20,000,000 million casualties, ten percent of its population. Eisenhower planned the D-Day invasion and delayed it to make the USSR bear the predominant brunt of the German war machine to deliberately weaken both.

A first use of nuclear weapons is just a terror technique of a powerful nation to intimidate the weak, just as a similar policy by Pakistan is a desperate threat of a weak and fearful nation chastised by having previously lost its east wing.

Well advertised and effective fortifications and crippling retaliatory strike power are usually effective deterrents. The attacker is often at a disadvantage as it is fighting in alien territory, often of different ethnicity, customs and language. Natural scientists give the examples of predator and prey like the fox and hare, the cheetah and gazelle, the lion and antelope. Only a small percentage of hunts are successful. While the hunter is running for its dinner, the hunted is running for its life. This is also why predators pick out the weakest and youngest preferentially to prey upon. Aggressive nations do the same. They are much more restrained with the strong and invariably bully the weak and small. It is for this reason that companies likely to grow bigger by acquisitions. It boosts the ego and the pay of the managers and often gives them monopolistic pricing or markets.

Rockefeller's Standard Oil bought up other kerosene makers and sellers by under-pricing and after eliminating competitors, raised prices to make windfall profits. Walmart uses similar tactics but within the legal framework. Presently the big banks by their sheer size and stranglehold on the economy have obtained massive taxpayer bailouts even though they were the culprits that sank the economy. Politicians the world over, are mostly shameless selfish whores. That is why Obama and the Congress are shoveling money by the truck full to the banks and mouthing platitudes and verbal sympathy to homeowners under water with their mortgages, but offering no monetary or interest rate help.

Insurgencies often result when foreign soldiers with no knowledge of the invaded country's culture, customs and language occupy it. These and ethnic or color differences lead the victor to denigrate and maltreat the vanquished. Lethal force is overused and torture and abuse crop up. This increases alienation. In a country like Afghanistan, a graveyard of conquerors for over two thousand years and now infected with a fanatic form of Islam, we have the willingness to fight and die, an insurgent sympathetic or supportive population and a geography without infrastructure, ideal for guerrilla warfare. Opposing them is the American military, less willing to fight and suffer casualties, in unfamiliar territory and unable to speak the language or understand the culture. Its first and main resort is massive and indiscriminate aerial bombing with large innocent civilian deaths. The result is Hercules' Anteus problem or Jason's demonic men's blood problem.

Hercules during one of his labors had to defeat the giant Anteus in wrestling. Anteus was born from the earth and every time Hercules knocked him to the ground, his mother, he got up ten times stronger. Jason's problem was that if he killed the dragon men, from every drop of their blood falling on the ground there arose more. The US military problem is that the death of innocent civilians by bombing increases the number of insurgents, their hatred of the US and their insatiable desire for revenge. To make matters worse, the US is now repeating its foolish, self-defeating policy in the tribal areas of Pakistan, ignoring the advice of its own expert in counterinsurgency, David Kilcullen.

The lesson that idiot nations like India have yet to learn is that those who give military and non-humanitarian aid to your enemy are not friends or even well wishers. A tenant who installs a burglar alarm in the rented house is not doing it for the benefit of the landlord but for his own benefit. There is nothing wrong, shameful or deserving criticism in the tenant's action, but only an idiot landlord would label it virtuous altruism or a friendly gesture. Such stupid countries are like investors who rejoice that a company is using its free cash flow to buy back its stock even as it is hitting a new high much above its tangible book value and at the upper end of the range of its price-earnings ratio. Sometimes though not usually it may be alright to do such buy backs but certainly not when the insiders are selling their stock by the bucketfuls. Such buying back is to keep the stock price high, while wasting the company's finances, to allow the managers to unload at greater profit. It is better for the investor to buy the stock of a sound company when it is selling at the lows or below book value and the company is buying back its shares with free cash flow. Even then the buy back is to provide the managers with future stock options at the current low price. The managers hope to make a killing in the future when stock prices will rise. At such time a buying investor will find that his future interests are aligned with the managers and the time is right.

Momentum traders are believers in the greater fool theory. They can be successful because as someone wisely said, 'In the short run the market is a voting machine, but in the long run it is a weighing machine'. Those who are nimble and prudent enough to take a ride with momentum and get off before the train wreck that is inevitable with time are enriched profusely, while most misguided fools ride into oblivion and ruin, evident now. The same is true of countries. Those intoxicated by power and wealth begin to believe that there is something inherently superior and deserving in their pre-eminent status making them exceptional, virtuous beacons of light, chosen people anointed by god, until the inexorable mills of time grinds them to dust and irrelevance. Sic transit gloria mundi.